The Power of People in Digital Banking Transformation

The Power of People in Digital Banking Transformation

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The Power of People in Digital Banking Transformation

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  • Lesson Five: Extend Agile Ways of Working to Areas Beyond IT

    To keep up with the rapid pace of change and innovation in the digital world, companies need to extend the agile principles that have been around for decades in software development to other areas of the business.

    With an agile approach, the focus is on empowering people to collaborate in multidisciplinary teams and make decisions quickly and effectively. We see many benefits of agile processes over traditional ones. Short iterations mean that teams can change direction and react quickly. Progress remains visible and predictable because development happens in short sprints. Delivery risk progressively declines.

    Leading banks often think about implementing an agile approach in three phases: first within IT, then scaling to select parts of the business, and finally extending throughout the business. On the basis of our work with leading companies, we see great potential for extending agile principles beyond software development to include functions involved in delivering customer propositions, such as product management, marketing, and digital channels. Elements of an agile approach—such as having small multidisciplinary teams work in sprints and conducting short daily meetings where people stand up—can even be applied to support functions, such as human resources and risk.


    Facing pressure from digital innovators who are increasingly influencing customer expectations, ING Netherlands (the Dutch domestic-banking unit of ING), embarked on an agile transformation with three objectives:

    • Allow the bank to respond more quickly to changing customer requirements.
    • Increase efficiency and effectiveness by breaking down organizational silos and removing bureaucracy.
    • Increase staff engagement and make the bank more attractive to digital talent.

    Drawing inspiration from Google, Netflix, Zappos, and especially Spotify, the bank reorganized into squads, chapters, tribes, and guilds, with employees from marketing, product development, digital channels, and IT working together in small, multidisciplinary, colocated teams. Teams are empowered end-to-end to develop, test, deploy, maintain, and adapt customer processes and offerings according to their specific purposes. At the same time, the bank adopted a new governance system to ensure that teams are aligned with the company’s larger business objectives and overall purpose.

    The agile transformation has enabled teams to move from releasing software a few times per year to once every few weeks. And although gaining efficiency was not a goal in itself, extending agile principles to areas beyond IT assisted the bank in reducing the size of the workforce by 30% in areas such as marketing and channel and product management. Meanwhile, the bank’s digital ambitions and innovative culture have helped attract talent from outside the company to strengthen its internal capabilities in the most important areas.

    “Critical for the agile transformation was an aligned leadership team, eager to learn from organizations outside our own industry and willing to embrace change,” said Bart Schlatmann, COO of ING Netherlands. “We came to realize that the bank is increasingly becoming a tech company, and we believe agile should be a way of living for everyone.”

    Spotify offers an example of how agile principles can be applied at scale across IT and product management. (See Exhibit 5.) The company’s delivery organization is made up of squads, chapters, tribes, and guilds. The primary unit is the squad, a multidisciplinary team whose members work toward a shared goal. Chapters are groups of people with similar expertise across squads, and they form the line organization. Tribes are groups of squads that work on related areas. Guilds are interest groups that anyone can join. In this model, creating alignment among all these working groups enables squads to have greater autonomy and empowerment, which supports a culture of innovation. Banks could use this same model in their delivery organization to improve customer service and experience. For example, ING Netherlands, the Dutch domestic-banking unit of ING, has already made strides toward greater agility by adopting the Spotify model. (See “Agile Ways of Working at ING.”)


    Such agile ways of working require that companies develop new roles. For instance, companies must develop multidisciplinary teams with positions such as agile coaches, as well as product owners who lead product development sprints. Existing roles also may need to change significantly. With agile ways of working, companies distribute the traditional responsibilities of the manager across the product owner, chapter lead, and agile-coach roles. Changes such as these can stimulate cooperation across traditional organizational silos, among other important benefits.